Mr Bush and other US officials have long accused Iran of supplying weapons to insurgents in Iraq, but in a speech to veterans on Tuesday the President hardened his stance by lumping Tehran and Al Qaeda together.

Mr Bush's verbal attack on Iran came just hours after Iranian President Mahmoud Ahmadinejad said the power of the United States was rapidly collapsing in Iraq and that Tehran was ready to step in to help fill the vacuum.

Iran blames the US-led invasion of Iraq in 2003 for the violence that is threatening to tear the country apart and has repeatedly called on US forces, now numbering about 160,000, to leave the neighbouring country.

Mr Hosseini said the US path was neither "useful or fruitful", adding: "It is better for him [Bush] to change his point of view and political decisions."

The two countries, which have not had diplomatic ties since shortly after Iran's 1979 Islamic revolution, are also embroiled in a standoff over Tehran's nuclear program, which the West fears is aimed at making atom bombs. Tehran denies the charge.

In Tuesday's speech, Mr Bush warned that extremist forces would be emboldened if the United States were driven out of the region, leaving Iran to pursue a nuclear weapon and set off an arms race.

"Iran could conclude that we were weak and could not stop them from gaining nuclear weapons," Mr Bush said.

With 164,000 US troops in Iraq and patience growing thin in the Democratic-controlled US Congress and the American public, Mr Bush has been defending his Iraq war strategy.

A report by the US commander on the ground in Iraq, General David Petraeus, and the US ambassador to Iraq, Ryan Crocker, due to be sent to Congress by September 15, could trigger a change in Iraq policy.